New Forex policy fails to stimulate debt market window


stock exchangeThe debt market window of the capital market is yet to feel the impact of the new forex policy, as investors exchanged a total of 4,170 units of Federal Government Bonds valued at N4.41 million were traded in 3 deals compared to a total of 4,725 units of Federal Government Bonds valued at N5.27 million transacted in the erstwhile week in 3 deals.


Meanwhile, a turnover of 2.16 billion shares worth  N20.39 billion in  24,369 deals were traded this week by investors on the floor of the Exchange in contrast to a total of 959.92 million shares valued at N7.87 billion that exchanged hands last week in 17,561 deals.


The Financial Services Industry (measured by volume) led the activity chart with 1.94 billion shares valued at N12.39 billion traded in 16,023 deals; thus contributing 89.85 per cent and 60.77 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 77.42 million shares worth N4.75 billion in 3,489 deals.


The third place was occupied by the Conglomerates Industry with a turnover of 74.44 million shares worth N412.72 million in 1,018 deals.


Trading in the Top Three Equities namely – United Bank For Africa Plc, FBN Holdings Plc and Zenith Bank Plc.(measured by volume) accounted for 1.00 billion shares worth N6.78 billion in 7,153 deals, contributing 46.37 per cent and 33.23 per cent to the total equity turnover volume and value respectively.


Furthermore, 44 equities appreciated in price during the week, higher than 27 equities of the previous week. However, 24 equities depreciated in price, lower than 41

equities of the previous week, while 112 equities remained unchanged

equal to that of the previous week.


Activities on the Nigerian Capital market witnessed a rebound at the close of the week ended June 17, 2016 after a somewhat protracted lull, on the heels of the release of a new Foreign Exchange (Forex Policy) by the Central Bank of Nigeria(CBN).


On the equities side, the two major measurement indicators- Nigerian Stock Exchange (NSE) All-Share Index and Market Capitalization appreciated by 7.40 per cent to close the week at 29,247.27 basis points(bps) and N10.01 trillion respectively.


In the same vein, all other indices finished higher during the week, with the exception of the NSE Alternative Securities Market (ASeM) Index, that declined by 0.17 per cent.


Recall that the CBN announced a new Forex policy on Wednesday, June 15,2016,

which among other modification, include the participation of the CBN in the Forex market through a single market to be operated through the interbank.


Analysts at Cowry Asset Management say that the rebound was mainly due to the announcement of the policy.


A review of activities on the Nigerian bourse, shortly after the announcement, showed that the NSE All-Share Index increased by 857.90 bps or 3.17 per cent.


An All-Share index is a series of numbers which shows the changing average value of the share prices of all companies on a stock exchange, which is used as a measure of how well a market is performing.



Although the index recorded a steady increase riding on the back of the new Forex Policy, the Managing Director of Cowry Asset Management, Johnson Chukwu is quite sceptical of the sustainability of the upward trend.


He is of the view that the trend would be prolonged if the country is able to transform its economic policies to be market oriented, in addition to stemming the rising tide of insecurity in the country, among other factors.


Similarly, Exchange Traded Products (ETPs) keyed into the trend, evident in a total of 519,199 units of ETP valued at N6.58 million executed in 42 deals, compared to a total of 78,666 units valued at N866,656.30 transacted in the preceding week in 25 deals.



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